JohnH

How true. Reminds me of a friend who tells of visiting his firefighter brother-in-law when a small fire erupted in the kitchen. After the B-I-L fumbled for a few panicky seconds with the fire extinguisher, my friend grabbed the extinguisher from him, pulled the safety pin, and doused the flames. When he started needling the B-I-L about his ineptness, the B-I-L blurted out "It's different when it's your own stuff ! " (Except I don't think he said "stuff")

You use the same EIN for Schedule C as the one you are using for Nanny tax. IRS wants any entity to only have one EIN. Look on page 10 of Pub 926. The TIP says: 　 You ordinarily will have an EIN if you previously paid taxes for employees, either as a household employer or as a sole proprietor of a business you own. If you already have an EIN, use that number. That instruction assumes you already have an EIN as a sole proprietor and are now paying Nanny Tax. It says to use the existing EIN. I assume that reversing the logic would yield the same answer..

OldJack: I'm still interested in your line of thought. The corporation would not incur any penalties because it incurs no tax liability. Income on the 1040 would be essentially the same after all the dust settled. What penalties would/could be assessed? (And how would they compare to the reduction of 15% Self-employment tax?)

Interesting, but I'm not processing this in the same way. In the extremely unlikely event that the auditor classified the distribution as a non-deductible expense of the corporation, what tax preparer would not think of amending the personal return and deleting the Schedule C? IRS can't have it both ways in this situation.

It's an S corporation. There's no issue with dividends or double taxation. That would only come into play with a C corp or in the extremely unlikely event there are retained earnings locked up in the S corp from prior operation as a C corp. And I doubt an auditor would make any adjustment, provided things are handled correctly going forward. But I'd still stay away from any reclassification (either via Schedule C or via retroactive payroll), if it produced EIC.

This could be their letterhead:

I agree. If there were cash distributions, then they can easily and legally be reclassified as payroll by grossing up the figures. But if there were no cash distributions, then there's no basis for just making up figures. But if reworking the figures generates EIC, that might be a land mine. I wouldn't go anywhere near that...

Well, no indictment is necessary. No trial or jury needed either. Any time you break any of the laws of thermodynamics, you skip the trial and go directly to serving the sentence.

Here is some good info on QDRO's http://www.dol.gov/ebsa/publications/qdros.html http://www.dol.gov/ebsa/faqs/faq_qdro.html Buried deep within one of the appendices is some sample language from IRS. Of course, as we all know, IRS cautions that we can't rely upon their advice...

I like it. An illustration of the principles behind a slide rule - basically a visual representation of log scales. I'm trying to decide if this is a 2-dimensional representation of these math principles, or if the introduction of different-color lines for the zero values technically makes it 3-dimensional. Maybe Rita will grade my paper...

And while the spouse in the car is signing, the client can look in the glove compartment for the check book.

Well that makes sense. I use several different devices and had wondered why I see this inconsistent behavior among them. Now I know.

Yes, travel light. Use a packing list. Take less than you think you'll need. That also leaves room to bring back purchases or souvenirs. I never pack medications or valuables in checked luggage. They always go in my backpack. I've also found that even the airlines that monitor carry-ons for size and weight are less likely to question backpacks, even whey they are over size or overweight. They generally focus on the rolling carry-ons, because those cause the most problems in overhead bins. I've even placed an oversize backpack on the sizing bin which was too big & didn't fit, but I just slung it back over my shoulder. Best to do that if the person watching the bin is really busy, or else ask them a question to distract them while you're doing it. But the best solution is to put a small collapsible day-pack inside the backpack or roll-on, with all the really critical stuff in that day-pack. Position it right at the top. In the event that they make you check the backpack or rolling carry-on at the aircraft door, you can pull out the day pack before surrendering the carry-on. The best one I've ever seen by far is the Civita Day Pack. (It also makes a nice pillow for leaning forward and napping on the tray table on long flights - best sleeping position I've ever devised in coach)

Prior to getting Global Entry, I had been getting TSA pre-check about half the time. One time I had it and my wife didn't, so that was a waste. Nothing guarantees TSA pre-check, but it's smart to do everything possible to qualify. The airlines make the final call on the TSA pre-check decision (not TSA), so a trusted traveler number greatly increases your odds because you're registered with them before the reservation is even made. Customs is a different ball game. Before Global Entry I'd been able to use the kiosk on one occasion, but have also stood in line for normal customs over an hour and a half on other occasions. But as more people sign up for Global Entry, they will begin to limit the kiosks to G/E holders only, or else they will have separate lines at the kiosks for US citizens who are not G/E, allowing the G/E holders to skip those lines. (more or less like the "single" lines at ski lifts). So for the non-G/E holder, that will become essentially the same as waiting in line for normal customs. Another benefit of G/E is that when you get the big "X" at the kiosk and still have to speak with a Customs agent, you get to jump to the front of THAT line. (Awkward to navigate because people in the lines may get annoyed, but permissible.) All this really isn't so much about just getting to the front of the line - it can become a really important time-saver when you have a connecting flight at the port of entry.

That was very interesting. Just goes to show how vulnerable soft-side luggage is. On the other hand, airlines also impose weight limits, so the heavier hard-side luggage means less stuff inside. But most people over-pack anyhow so a little packing discipline might be a good thing for most travelers. Here's another travel tip - if you anticipate doing any international travel, apply for Global Entry. Cost is $100 for 5 years. In most cases, it allows you to expedite your re-entry through Customs using automated kiosks. But it has an even more useful benefit, because anyone participating in Global Entry is issued a Trusted Traveler number which usually entitles you to use TSA pre-check when entering the TSA checkpoints. These are much shorter lines, no removal of jackets, shoes & belts, no removal of laptops. And the TSA pre-check preference applies to international AND domestic flights. The whole process takes about 3 months from start to finish, which includes a visit to the airport for a TSA interview and electronic fingerprinting. But in the end, it's a good investment of time for anyone planning to fly anywhere (international or domestic) more than a couple of times over the next 5 years. Especially if you're like me and tend to cut the time a little too close when going to the airport anyhow.

Rita: About that "landing a plane" , "unprofessional looking", and "random thoughts" comment, let me add something appropriate: One time a question was asked of Gen Chuck Yeager - famous fighter ace, test pilot, and first man to break the sound barrier & live to tell about it. The question was - > "What do you call a successful landing ?" Chuck's answer -> "Anything you walk away from."

That's an interesting history. So there's clearly more to the story. The progression is horse settlements to data entry clerks to EIC compliance agents to uncompensated auditors. Anybody out there still working on a Dead Horse settlement?

I think we may begin to see IRS slow down refunds in the future. It's the only way to deal with the fraud problem. They shot themselves in the foot years ago, back when they used the carrot and stick approach by offering fast-turnaround of refunds to push more people to e-flinging. Now that they have progressed to the e-flinging mandate, there's no longer any reason to keep the carrot out there. From this point forward, it's more a matter of forcing tax preparers to be uncompensated agents of the government. They're already well on their way and now it's just a matter of gradually tightening the noose. At this point there is really no downside to slowing down refunds. After one or two tax seasons, the hysteria will subside.

No good deed goes unpunished... Jack, knowing the extra lengths you went to in an effort to help other ATX users, plus the feedback you gave the company on their problems, CCH should give you the software for this year and several years to come. The fact that they don't recognize that (yet spend hundreds of thousand of dollars to advertise & promote their product) speaks volumes about their corporate philosophy.

I think there is some poetic justice in the IRS having to refer to a dead horse statute to try and defend a power grab of this magnitude. Wonder how Judge Boasberg kept it together without bursting into hysterical laughter the first time this came up in open court. At least the IRS was smart enough to skip the spectacle of stinking up the Supreme Corral by flogging this thing all the way to the top.

They probably rely mainly on word-of-mouth advertising.

Google tells me this is a sign for a company which sells floor maintenance services. Seems like they should give a 10% discount on their services if you can pronounce the word when you walk in the door.

Here's one I need on occasion, plus a second for general usage:

Good to keep them on their toes. QuickBooks is totally a double entry system - the offsetting entry is just done in the background. (that's why QB calls them "registers"). But I know why you say that, because if someone can't see the offsetting entry, they may not be aware it's there. It's still good to draw a "T" account setup every now & ten when teaching someone how to use QB. If they grasp it, then they're a long way down the road to understanding what's really going on in QB.

That's an interesting observation - never thought about it before. If a tax preparer has never known anything but e-flinging, it is possible for them not to have a comprehensive understanding of how the return actually comes together. I can see how they would be at a serious disadvantage in reviewing a return. More or less like someone trying to understand accounting when they haven't grasped the basics of double-entry.